A Firm with a Substandard Return on Total Assets Can

question 93

Multiple Choice

A firm with a substandard return on total assets can improve its return on equity, all else remaining the same, by

• A) increasing its debt ratio.
• B) increasing its total asset turnover.
• C) decreasing its debt ratio.
• D) decreasing its total asset turnover.

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Definitions:

Expected Income Stream

The anticipated series of payments or revenues over a specified period.

Investment Project

A project involving the allocation of capital with the intention of generating future returns.

Expected Rate Of Return

The profit or loss an investor anticipates on an investment, stated as a percentage of the initial investment.

Total Investment

The sum of all expenditures on capital assets, including stocks, bonds, real estate, and physical goods, within a specific period.